Scottish GDP growth hampered by refinery strike in late 2013

Reuters Staff

3 Min Read

LONDON (Reuters) - A strike at Scotland’s only oil refinery contributed to a sharp slowdown in economic growth at the end of 2013 at a time when the rest of the British economy was booming, data showed on Wednesday.

While the slowdown highlighted Scotland’s reliance on oil and gas industries to drive growth, new figures also showed Scotland’s unemployment rate fell further below that in the rest of the United Kingdom.

Economic prosperity is a key battleground ahead of a September 18 referendum on Scottish independence, with Scotland’s First Minister Alex Salmond arguing a “yes” vote would free his nation from decades of economic mismanagement.

Scotland’s economy grew just 0.2 percent in the fourth quarter, its devolved government said, compared with the 0.7 percent average for Britain as a whole over the same period.

Last October’s strike at the Grangemouth refinery, which provides around 70 percent of Scotland’s fuel, prompted a near 11 percent fall in Scottish petrochemicals and pharmaceuticals sector output - enough to shave around 0.2 percentage points off Scottish economic growth.

A slight decline in construction also dampened growth, which was driven mainly by the services sector.

“It is concerning to see the impact this one industrial dispute had on Scotland’s economic performance,” said Scottish Secretary Alastair Carmichael, a minister in the British government that stands against independence.

Scotland’s economy over 2013 as a whole was stronger, growing by 1.6 percent, compared with 1.7 percent for Britain as a whole.

Separate data on Wednesday showed Scotland’s unemployment rate fell to 6.5 percent in the three months to February from 6.9 percent in the three months to January, data from the Office for National Statistics showed.

By comparison, Britain’s unemployment rate fell to 6.9 percent from 7.2 percent, its lowest level for five years and better than forecast.

A poll on Wednesday showed the battle over Scottish independence is tightening, as independence supporters gained ground slightly as more Scots get involved in the debate.

Scotland’s economy accounts for about 9 percent of the UK economy which is the third-largest in Europe and sixth globally, according to World Bank rankings for 2012.

The Scottish government envisages using the money from the 94 percent of British oil and gas production tax revenues it estimates come from Scottish waters to support its state spending.

But how to divide oil revenues, along with issues such as the currency and national debt, remain to be negotiated between Edinburgh and London should Scotland vote to end its 307-year-old union with England.